Live updates

It's an about-turn by the Government which might well save thousands of jobs across our region. The treasury has announced it's backing down on plans to introduce a 20 per cent tax rate on static caravans. Ben Erlam reports.

A week ago East Yorkshire caravan manufacturers Willerby Holiday Homes announced hundreds of jobs could go because of plans to introduce 20% VAT on the sale of static caravans. Now we have been speaking to CEO Jim Meredith following the announcement only 5% will be put on the sale of them.

Advertisement

MPs have welcomed the Government's U-turn on the controversial caravan tax that would have seen 20% VAT levied on static caravans.

Last night the Treasury announced the tax would be set at just 5% raising hopes of safeguarding jobs in the region including 350 set to be axed at Willerby Holiday Homes in Hull. Beverley and Holderness MP Graham Stuart, who organised a mass petition, is delighted by the news.

Following the Government's decision to tax the sale of static caravans at 5% instead of 20% Beverley and Holderness MP Graham Stuart had this to say:

I am relieved that the Government listened to the arguments, took people’s concerns on board, and decided on a much more reasonable tax on static holiday caravans.

Everyone knows the challenges of tackling the deficit if our children andgrandchildren aren’t to be saddled with huge levels of debt. That’s why theGovernment has to look at every possible source of revenue. But they also have tolisten – which they did – and thousands of jobs will be safeguarded as a result.

Following the Government's decision to reduce planned VAT on the sale of static caravans from 20% to 5% an East Yorkshire caravan manufacturers say they welcome the move. Last week Willerby Holiday Homes announced hundreds of its staff could be made redundant if the VAT plans were to go ahead.

Today, they say they hope the Government's decision will have "a positive effect" on the planning of the business.

The Government has decided to reduce the amount of VAT to be put on the sale of static caravans. It was going to be 20%, but this is now going to be 5% from April 2013.

I am still concerned that imposing a 5% VAT will undermine the caravan industry when the economy is in recession. The Government has finally listened to the volume of criticism of this chaotic policy. This knee jerk plan is part of an unfair budget that benefits the rich. Wealthy people will continue to pay 1% on second homes while working people who aspire to own a static caravan for weekend breaks will pay 5%. The impact of 5% VAT on the caravan industry now needs to be analysed and the effect on local jobs needs to be measured.

The proposed 20% tax on static caravans is to be reduced to 5%. It will be implemented from April next year. A Treasury spokesperson has released this statement tonight.

At the Budget we announced proposals to address anomalies that have built up in the VAT system and have led to similar products being taxed differently. We have now finished the consultation on these proposals and are taking on board the points made, while still making sure we meet the objective of clearer and more consistent system that we set out at the time.”

The Government is expected to announce a U-turn on the controversial proposed 20% VAT on static caravans.

Instead of charging full VAT, the tax would be set at just 5%.

Rachel Reeves, MP for Leeds West and Labour's shadow Chief Secretary to the Treasury said:

"George Osborne's Budget has been a total and utter shambles. These partial u-turns, just a few weeks after Ministers were defending the pasty tax and caravan tax, show just how ill thought through the Budget was and how out of touch David Cameron and George Osborne are.....

...With Britain pushed into a double dip recession by this government's mistakes we urgently need a change of course on economic policy."

The Government is expected to announce a U-turn on the controversial proposed 20% VAT on static caravans.

Instead of charging full VAT, the tax would be set at just 5%.

Andrew Percy the Conservative MP for Brigg and Goole said

“This is a really big success. We would have liked it to have been reversed completely, but the Government can still say it’s corrected the anomaly between different caravan types....This is a sign of strength in this Government that it can carry out a genuine consultation and then admit it was a disastrous policy.

Had they levied the tax at 20% they would have killed a very successful manufacturing industry.

To their credit, ministers have stuck their hands up and said “we got it wrong”.